What are the requirements to apply for a loan modification under the Home Affordable Modification Program?

In March 2009, the U.S. Treasury Department announced the guidelines for “making home affordable” for 4 to 5 million homeowners with existing mortgages owned by Fannie Mae or Freddie Mac.  Under the Home Affordable Modification Program, these homeowners can refinance their loan to take advantage of lower mortgage rates, or refinance an adjustable-rate mortgage into a more stable mortgage, such as a 30-year fixed rate loan.  The program is for borrowers who normally would be unable to refinance because their homes have current loan-to-value ratios above 80%.

The program services loans that originated on or before January 1, 2009 –  specifically, first-lien loans on owner-occupied properties with unpaid principal balances up to $729,750 (there are higher limits allowed for owner-occupied properties with 2-4 units).  All borrowers must fully document their income, and they must sign an affidavit of financial hardship.  The program provides incentives to lenders and servicers to modify at-risk borrowers who have not yet missed payments when the servicer determines that the borrower is at imminent risk of default. Modifications will be offered until December 31, 2012, and a loan can be modified only once under the program.